Multiple Choice
An FI manager purchases a zero-coupon bond that has two years to maturity.The manager paid $76.95 per $100 for the bond.The current yield on a one-year bond of equal risk is 12 percent,and the one-year rate in one year is expected to be either 16.65 percent or 15.35 percent.Either rate is equally probable.
What is the yield to maturity for the two-year bond if held to maturity?
A) 27.99 percent.
B) 13.54 percent.
C) 29.95 percent.
D) 14.00 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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